Federal Banking Official Meets with Colorado Pot Shops

DENVER (AP) — A federal banking official took the unprecedented step Thursday of meeting with marijuana business owners.

But Kansas City Federal Reserve President Esther George gave no indication that the industry is any closer to getting more access to banking services.

The Denver meeting was arranged by two Colorado congressmen who have tried unsuccessfully to pass laws expanding banking access for the pot industry, Democratic Reps. Ed Perlmutter and Jared Polis.

Also joining the closed-door meeting were Colorado bankers. It was thought to be the first meeting of a Federal Reserve president with pot businesses.

“She was gracious enough to take up our invitation to meet … so that she could hear firsthand the challenges that they face lacking access to our banking system,” Polis told reporters after the meeting.

George listened to tales of pot-shop owners losing bank account after bank account because marijuana remains illegal under federal law.

She gave no indication, though, whether the Federal Reserve is any closer to a decision on a long-stalled application from a Colorado-licensed bank for the pot industry.

Colorado awarded a license last year to a credit union to serve the industry. But the Fourth Corner Credit Union can’t start taking deposits without clearance from the Federal Reserve. The application has been on hold in the Kansas City office.

Federal authorities last year released guidelines to banks about how to accept pot-related clients, but most banks have declined.

Banks routinely reject pot businesses for even basic services such as checking accounts because they fear running afoul of federal law, which considers marijuana and its proceeds illegal.

The marijuana industry currently relies on a hodge-podge of banking work-arounds, from changing accounts frequently using innocuous-sounding names to hiring armed guards to ferry truckloads of cash. Some even douse cash with air freshener to try to avoid scrutiny from banks.

“My concern is that somebody’s going to get killed before change is made,” said one of the participants in the meeting, Charles Smith of Denver-based Dixie Brands Inc., which makes marijuana-infused sodas and candies.

The Federal Reserve declined a request from The Associated Press to attend the meeting. Colorado Open Meetings Law requires access to meetings with two or more public officials discussing topics of public interest, but the requirement does not extend to federal officials including members of Congress.